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TMI Blog1986 (7) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... e was entitled to a total pension of Rs. 12,672 per annum. He, however, opted for the service benefit, which, we are given to understand, was three years' salary, which amounted to Rs. 77,760 in lieu of surrender of 5.4 per cent thereof from the pension. The pension was, thus, reduced by 5.4 per cent of Rs. 77,760, i.e., Rs. 4,199 and the reduced pension was only Rs. 8,473 as against Rs. 12,672 earlier. In the salary certificate, which was given by the employer the amount of service benefit of Rs. 77,760 was shown as gratuity and exemption of an amount of Rs. 28,594 was claimed under section 10(10)(iii) of the Income-tax Act, 1961 ('the Act'). The ITO, however, held that what was received by the assessee was in lieu of surrender of part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 10(10A)(ii) in the case of payment in commutation of pension from any other employer does not talk of the determination of the commuted value having regard to the age of the recipient, the state of his health, the rate of interest and officially recognised tables of mortality as a condition for exemption but talks of them only for determining the limit up to which the exemption has to be allowed. Proceeding further he submitted that the employer, i.e., the British Petroleum Co. Ltd. has certified that under the rules of the B.P. Pension Scheme for Indian staff the commuted value of the pension has been determined on the advice of the Scheme's Actuary after due consideration of the average age on retirement, the net rate of interest aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed by the AAC. 7. The learned departmental representative, Shri Subramanian, in reply referred to the definition of 'profits in lieu of salary' inserted by sub-section (3) of section 17 of the Act, where any payment from an employer or former employer received or due to be received not being assessee's contribution to an approved provident fund or superannuation fund or interest thereon or amounts exempt under section 10 are included in 'profits in lieu of salary' and consequently in 'salary' as defined under sub-section (1) of section 17. Proceeding further he submitted that the assessee's claim before the ITO was that the service benefit of Rs. 77,760 was gratuity and before the AAC the assessee changed his stand to claim that the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) in a case where the employee receives any gratuity, the commuted value of one-third of the pension which he is normally entitled to receive, and (b) in any other case, the commuted value of one-half of such pension, such commuted value being determined having regard to the age of the recipient, the state of his health, the rate of interest and officially recognised tables of mortality: Provided that the maximum limit of payment specified in sub-clause (ii)(a) or sub-clause (ii)(b) shall not apply in respect of any such payment made before the 19th day of August, 1965 ;" This makes it very clear that any payment in commutation of pension received under any scheme of any other employer is exempt up to the limits laid down therein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice of the Scheme's Actuary had given due consideration to the average age on retirement, the net rate of interest after allowing for the possibility of discretionary pension increases and the expected mortality of the pensioner. This certificate, however, is undated and there is no material before us to show that this certificate was filed before the ITO. Besides, the claim of exemption of the service benefit on the basis that it was payment in commutation of pension was not made before the ITO but was made for the first time before the AAC and, as pointed out by the learned departmental representative, Shri Subramanian, the ITO was not given a specific and reasonable opportunity to verify this claim and make his submissions in this connec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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